Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII

Takeaway: People aren’t bearish enough on where GPS’ P&L could go. | 15 SIGMAs this wk. ULTA, EXPR only pos setups. AEO is the big negative one to us.

GPS - Lousy November Comp

Our Take: "Just another lousy month for Gap, Inc." At least that's what we think the sentiment on the stock is saying. There's definite complacency in its persistent ability to underperform.

But make no mistake...this story can, and likely will, get a lot worse.  Sales productivity today (blended) is in excess of $400/foot. In past recessions it's dropped down closer to $360/foot. And on a go-forward basis, with increasing competition from Uniqlo, H&M, and not to mention little ol' Primark, we think that GPS is just structurally unable to compete -- especially at a 12%+ margin structure when we're late in the economic cycle.

We're fully aware that the stock is down 40% year to date, and it looks "cheap" (whatever that means) at 10x earnings. But take sales productivity down by 15%-20% and the fixed cost deleverage takes EPS negative. Not so "cheap" on those numbers.

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart1

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart2

15 Retail SIGMAs This Week

We’ll have our full book of 125+ SIGMAs out shortly. But this week’s data offered up far more bad than good. And we’re not talking about what the numbers reported as much as we are what the sales/inventory/GM triangulation suggests about 1H16. Bottom line, estimates remain too high. We’re at peak margins, and there are too few dollars chasing too much inventory.

Winners: The BIG winners, where the setup augers quite well for estimate revisions even above what we just saw, are ULTA, EXPR, and that’s pretty much it.

Losers: Here’s the inverse – inventory/sales/margin setup is changing negative on the margin. Biggest Losers are: AEO (adding to our short bench), DG, PVH, FIVE, LE, GIII

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart3

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart4

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart8

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart5

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart6

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart7

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart16

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart9

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart10

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart11

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart12

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart13

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart14

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart15

Retail Callouts (12/4) | GPS Comps, SIGMAs - ULTA, AEO, EXPR, DG, PVH, FIVE, LE, GIII - 12 4 2015 chart17

AMZN - After key Amazon representatives no-showed a meeting with Robbinsville, NJ officials Wednesday, the mayor vowed to take the online retail giant to court demanding the shutdown of its 1.2 million-square-foot warehouse if the traffic problems remain unresolved.

(http://www.ecommercebytes.com/cab/abn/y15/m12/i03/s03)

DG - Dollar General Names John W. Garratt as Chief Financial Officer

(http://investor.shareholder.com/dollar/releasedetail.cfm?ReleaseID=945346)

Rossignol in Talks to Buy French Bike Maker

(http://www.sportsonesource.com/news/article_home.asp?Prod=1&section=8&id=58573)